Targeted Asset Purchases and Business Dynamics: Evidence From Exits and Entries of German Plants

59 Pages Posted: 19 Jan 2023 Last revised: 20 May 2023

See all articles by Manfred Antoni

Manfred Antoni

Institute for Employment Research (IAB)

Talina Sondershaus

Lund University School of Economics and Management

Abstract

Do targeted asset purchases alter business dynamics of small and medium sized enterprises (SMEs) and their plants? In July 2022, the European Central Bank (ECB) established the Transmission Protection Instrument (TPI), which allows for targeted asset purchases to prevent a resurgence of the sovereign debt crisis during times of rising interest rates. To investigate unintended consequences of such crisis tools, we assess a similar program, conducted by the ECB between 2010 and 2012. We find that plants linked to banks exposed to the targeted asset purchases are approximately 20% less likely to exit. We observe heterogeneous effects depending on the capitalization of banks and productivity of firms.

Keywords: Plant exits, extensive margin factor reallocation, asset purchase programs, targeted asset purchases, crisis instruments, monetary transaction mechanism, Transmission Protection Instrument

Suggested Citation

Antoni, Manfred and Sondershaus, Talina, Targeted Asset Purchases and Business Dynamics: Evidence From Exits and Entries of German Plants. Available at SSRN: https://ssrn.com/abstract=4329841 or http://dx.doi.org/10.2139/ssrn.4329841

Manfred Antoni

Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

Talina Sondershaus (Contact Author)

Lund University School of Economics and Management ( email )

Lund

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